Support

A cookie is a piece of data stored by your browser or device that helps websites like this one recognize return visitors. We use cookies to give you the best experience on BNA.com. Some cookies are also necessary for the technical operation of our website. If you continue browsing, you agree to this site’s use of cookies.

Events

Bloomberg Next marketing services allow clients to elevate their brands and extend their reach through our established and trusted expertise, enhanced with engaging event production, appealing design, and compelling messaging.

Dec. 7 — President-elect Donald Trump’s promise to scrap the
Trans-Pacific Partnership trade pact has stoked U.S. tech sector fears that China will take the lead in setting standards
for digital trade.

Software and mobile application trade groups say a free flow of data facilitates the
exchange of technological innovation and scientific discoveries. The groups also argue
that a ban on localization rules, which require locally created data to be stored
on servers within the same country, would encourage business growth and competition.
But without the TPP, China will likely assume a greater voice in developing trade
rules that won’t contain such data provisions, attorneys and technology sources told
Bloomberg BNA.

“We’re concerned China will see this as an opportunity to take advantage and claim
a larger role on the stage,” Morgan Reed, executive director of ACT | The App Association,
a mobile app trade group in Washington, said.

The TPP’s demise could enable China to step in and take the U.S.'s place in leading
trade agreements in Asia, according to David Glynn, an international trade lawyer
and of counsel at Holland & Hart LLP in Denver. Those agreements likely wouldn’t contain
a ban on data localization rules nor enable the free flow of data, he said.

China has several laws prohibiting the storage of local data outside of the country.
China’s Population and Healthcare Information Management Measures ban citizens’ health
and medical information from being stored on servers outside of China. The country’s
Online Publishing Service Management Rules require online publishing companies to
maintain servers and other network equipment in the country.

The U.S. has had continuous concerns over China’s data localization policies. The
U.S. Chamber of Commerce, along with a global coalition of business interests, in
August urged China to change proposed rules requiring insurers and other businesses
to maintain sensitive data servers in the country. They said such rules would impede
economic growth and create barriers for businesses trying to enter the Chinese market.

Glynn said China is not likely to support a ban on data localization nor promote cross-border
data flows. China’s “internet policy is an indicator of the government’s desire to
control information flow—clearly not a policy geared to free flow of data,” he said.

With the TPP moribund, the technology sector isn’t waiting around for the deal to
be formally scrapped. It’s pushing Trump to champion open data provisions via other
avenues in the absence of the trade pact.

Tech trade groups have been communicating directly with the transition team, sending
the incoming administration letters and policy recommendations. They’re also developing
lobbying strategies for when the administration is in place.

The tech sector wants to ensure the incoming administration understands that the free
flow of data, and bans on data localization rules, are critical to U.S. exports, Matthew
Schruers, vice president for law and policy at the Computer & Communications Industry
Association, said. “I’m confident that when the issues are understood, promoting digital
trade is not a partisan issue,”
he said.

A spokesman for the Trump transition team didn’t immediately respond to a request
for comment.

Trump Nov. 21 confirmed his plan to withdraw the U.S. from the TPP, an agreement finalized
in 2015 between 12 countries. China wasn’t a party to the accord, which isn’t the
only multilateral Pacific trade deal going. China is one of 16 parties to a proposed
trade agreement known as the Regional Comprehensive Economic Partnership (RCEP), which
is still under negotiation and doesn’t include the U.S.

Other Avenues

The tech sector has called the TPP’s data provisions vital for digital trade and economic
growth. The electronic commerce chapter of the TPP would permit the transfer of data
across borders and ban data localization.

Jeremy Malcolm, senior global policy analyst at the Electronic Frontier Foundation
in Washington, said China’s greater voice in trade could negatively impact e-commerce
companies looking to do business in foreign markets. But the TPP isn’t the only way
to address data localization.

“We have been using trade agreements to deal with digital trade issues, but it’s not
the only avenue,”
Malcolm said. International fora, such as the G-20 and the Internet Governance Forum,
could be another avenue to setting digital trade standards, he said.

Victoria Espinel, president and chief executive officer of BSA | The Software Alliance,
said that if the TPP doesn’t go through, there are other opportunities for the U.S.
to show leadership in digital trade, such as through bilateral discussions and agreements.
Espinel said her organization will reach out to the new administration to discuss
the importance of cross-border data transfers and a data localization ban.

Several other groups in the tech sector have been urging the incoming administration
to make digital trade a U.S. priority.

Reed said that the ACT | The App Association has been in direct contact with the transition
team and has been speaking with Trump transition agency landing teams as they come
in on the importance of the TPP’s data provisions.

“It’ll be very important for the Trump administration to make sure it is doing everything
it can to set the rules of the road,” Reed said.

The Internet Association sent to Trump a proposed
policy roadmap, which urged him to support “strong digital trade policies that promote the free
flow of knowledge and information across borders.” The roadmap provides that the U.S.
should promote a “trans-Atlantic” digital single market and support trade agreements
that prohibit data localization.

The Information Technology and Innovation Foundation
(ITIF) issued a
memo to Trump, recommending policies that could spur digital trade. The ITIF proposed
that the new administration initiate negotiations with U.S. trading partners for a
“Geneva Convention on the Status of Data,”
which would establish international legal standards for government access to data.

Stephen Ezell, ITIF’s vice president for global innovation policy, said that pursuing
such a strategy “would go a long way” to helping protect data flows across borders.

“We remain hopeful the incoming president prioritizes digital trade policy issues
as digital trade is a key enabler of the modern global economy, for both traditional
and digital industries alike,” Ezell said.

To contact the reporter on this story: Alexis Kramer in Washington at
aKramer@bna.com

To contact the editor responsible for this story:
Keith Perine at
kperine@bna.com

All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to books@bna.com.

Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)

Notify me when updates are available (No standing order will be created).

This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to research@bna.com.

Put me on standing order

Notify me when new releases are available (no standing order will be created)